Ten Worst States To Retire To

I like the magazine articles that list the top 10 this or that. I’m always a sucker to click on the link and see if my state, or my city are listed. Unfortunately, my state is on the Kiplinger’s List of worst states to retire to.

Relatively high taxes for state income are a key to determiner of being the worst states list. Additionally, many of the states have a high cost-of-living. I imagine the best places they would recommend would be low-tax states or ones without an income tax at all on the state level.

I have friends that have been looking at properties in Florida. Some of them have already bought places, but to use during the cold winter months. My understanding is if you live in Florida for six months and one day you can be a Florida resident. My wife and I could find a very nice house in Florida that would be virtually free to live in if we became residents there. I’m not sure she wants to be down there for that long though.

Here are the seven states have no personal income tax:

Wyoming

Washington

Texas

South Dakota

Nevada

Florida

Alaska

One would also need to look at what sales taxes are charged in a given state. I’m not interested in moving from our home state right now, but this will be a good thing to start looking at an early retirement. Perhaps when my son finishes college would be a good time to start thinking about where else we could live.

I fell like these lists that put an emphasis on state income tax in retirement are misleading. The state income tax makes a huge difference when you’re working (i.e. SD vs. MN), but in retirement, you should expect taxable income to be much lower, and state income tax should be a small consideration.

With a well structured portfolio, you can spend six-figures a year and pay no federal income tax. A few thousand in state income tax isn’t going to make or break you. I say live where you want to be.

We will stay in high tax Minnesota for the next 4 years while our son is in college. We pay 9% – so that is a big chunk of change versus a state with no taxes. Since we have stock options that have to be executed each year, there is no way around them, unless we are willing to live 6 months + 1 day for residency somewhere else. ☀️